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Exploring the Possibilities: Foreign Trade Zones

Exploring the Possibilities: Foreign Trade Zones. Joe Kiely, Town of Limon. What is an FTZ? What Are the Benefits a Company Locating in Colorado? What are the Local Benefits? A Look at Colorado’s International Trade Do FTZs exist in Colorado? An Invitation to Be Included in the Service Area.

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Exploring the Possibilities: Foreign Trade Zones

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  1. Exploring the Possibilities: Foreign Trade Zones Joe Kiely, Town of Limon

  2. What is an FTZ? • What Are the Benefits a Company Locating in Colorado? • What are the Local Benefits? • A Look at Colorado’s International Trade • Do FTZs exist in Colorado? • An Invitation to Be Included in the Service Area Topics

  3. What Is a Foreign Trade Zone? • The Foreign-Trade Zone Program was created by the U.S. government to facilitate international trade and increase the global competitiveness of U.S.-based companies. The program, which has existed since the 1930s, continues to thrive and change to better meet the needs of American companies in the global economy.

  4. An FTZ is an area within the United States, in or near a U.S. Customs port of entry, where foreign and domestic merchandise is considered to be outside the country, or at least, outside of U.S. Customs territory. • Customs duties and excise taxes are due only at the time of transfer from the FTZ for U.S. consumption. If the merchandise never enters the U.S. commerce, then no duties or taxes are paid on those items.

  5. FTZs are designated sites licensed by the FTZ Board (Commerce Secretary is Chairperson) at which special CBP procedures may be used. • A site which has been granted zone status may not be used for zone activity until the site or a section thereof has been separately approved for FTZ activation by local CBP officials.

  6. Company Benefits • Duty Deferral • Goods imported into the U.S. are subject to duty paid through the U.S. Customs and Border Protection (CBP). • FTZs affect the timing of the duty payment. If a product or good is moved into the U.S. outside an FTZ, duty is due upon arrival in the U.S. If the same product or good is moved into an FTZ, the duty is deferred as long as the product or good remains in the FTZ. • The good can be moved from one FTZ to another FTZ and the duty is still deferred.

  7. Federal income taxes are unchanged. • All other federal regulations apply. • Inverted Duty for Manufactured Products • When components of a final product come together in a final product, instead of duty being paid at the rate due on each component, the duty is paid only upon the final product and at a lower rate.

  8. Avoid Personal Property Tax • Products or goods stored in an FTZ are not subject to inventory tax, i.e. personal property taxes. • Local government may require payment in Lieu of Taxes • Marketing • The business may benefit from having a presence in the U.S.

  9. Local Benefits • Increased Real Property Taxes • While the goods stored in an FTZ are exempt from personal property taxes, facilities within an FTZ are subject to real property taxes. • .

  10. Increased Jobs • FTZs have a multiplier effect on local employment. Job creation follows a wide range of FTZ activities—assembly, manufacturing and distribution.

  11. U.S. Subsidiaries of Global Companies Play a Vital Role in Colorado’s Economy • U.S. subsidiaries own over $28 billion in gross property, plant and equipment. • U.S. subsidiaries own $2.5 billion in commercial property in Colorado. • U.S. subsidiaries announced 14 “Greenfield” projects in Colorado in 2010, creating an estimated 2,587 new jobs. • Marketing • An FTZ provides another reason to do business within and with this area.

  12. Colorado Trade

  13. Today, the bulk of U.S. FTZ activity occurs in subzones. Subzones, which carry all zone benefits, consist of a site or sites that are designed for a specific company or use for either warehousing or manufacturing. They account for 85% of all merchandise received in zones and 74% of all zone exports. … U.S. Foreign Trade Zones: Background and Issues for Congress

  14. Colorado FTZs • Colorado Springs FTZ #112 • Colorado Springs Foreign Trade Zone, Inc. • No Activity • .

  15. Denver FTZ No. 123 • City and County of Denver • 2012 Currently 1 Companies • 100% Oil/Petroleum • Vestas… application for Subzones • Pillow Kingdom … application for Subzone

  16. U.S. Subsidiaries of Global Companies Play a Vital Role in Colorado’s Economy • U.S. subsidiaries own over $28 billion in gross property, plant and equipment. • U.S. subsidiaries own $2.5 billion in commercial property in Colorado. • U.S. subsidiaries announced 14 “Greenfield” projects in Colorado in 2010, creating an estimated 2,587 new jobs. • Marketing • An FTZ provides another reason to do business within and with this area.

  17. Proposed Service Area

  18. Why be included in Service Area? • Allows quicker response to potential clients • Inclusion in Service Area makes getting a sub-zone a shorter process • Strengthens the Regional Economy!

  19. Would You Provide a Letter of Support for Our Application to the FTZ Board?

  20. Questions?

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